Officially called the 2025 Tax Act, the One Big Beautiful Bill (OBBB) is the biggest tax legislation since the 2017 TCJA, affecting families, retirees, business owners, and investors. If you’ve been seeing the headlines about the new Act and wondering what it actually means for your wallet or your business, here’s a plain-language summary of some of the One Big Beautiful Bill Act’s changes.
Watch a summary of the One Big Beautiful Bill
In our latest webinar, we walked through the major updates of this legislation, who’s impacted, and how to maximize your savings.
One Big Beautiful Bill Act summary for individuals
Income tax cuts made permanent
Remember those lower rates from the 2017 tax cuts? They were set to expire in 2025, but now they’re here to stay.
- The top rate stays at 37% (was going back up to 39.6%)
- Marriage penalty relief continues. For example: A married couple with $200,000 income will likely owe less tax in 2026 than they would have under the old rules
Bigger standard deduction
The standard deduction is permanently increased in 2025 and beyond:
- $30,000 (married filing jointly)
- $22,500 (head of household)
- $15,000 (single)
Tip: Consider bundling itemized deductions into a single year if they’ll exceed the standard deduction.
State and Local Tax (SALT) deduction cap
The SALT deduction cap has increased to $40,000 for 2025, with phased increases and a phaseout for high-income taxpayers.
Child Tax Credit (CTC) boost
The CTC goes up to $2,200 per child, indexed for inflation.
Planning point: Make sure each child has a valid Social Security number (SSN). The IRS can now deny the credit automatically if it’s missing.
Education: 529s, credits & SSNs
- You can now use 529 plans for more K-12 expenses (including tutoring and test prep)
- Education credits like the AOTC now require SSNs for students and EINs for schools
Tip: Double-check ID numbers before filing, as missing them means losing the credit.
New car loan interest deduction
From 2025–2028, you can deduct up to $10,000/year in interest on loans for new, US-built personal vehicles. The deduction phases out over $100,000 MAGI (single) or $200,000 (joint).
Strategy: If you’re buying a car soon, plan around these income limits to capture the full deduction.
Child & dependent care credit expanded
- Max credit: 50% of up to $6,000 in eligible expenses
- Full benefit for AGI up to $75,000 (or $150,000 for joint filers
Tip: Keep receipts for daycare, summer camps, and nanny wages. Every dollar counts!
New senior deduction
From 2025 to 2028, seniors 65+ can claim a $6,000 deduction per person. The deduction phases out starting at $75K (single) or $150K (joint).
Reminder: SSNs required for each qualifying person.
Mortgage deductions
Mortgage interest deduction stays capped at $750,000 (no return to the $1 million cap, unless you have grandfathered debt).
“Trump Accounts” for kids
A new tax-deferred investment account for kids under age 18:
- $5,000 annual contribution limit
- $1,000 federal contribution for children born between January 1, 2025, and December 31, 2028.
Tip: Open the account early to start compounding growth.
Health insurance tax credit rules tighten
Starting in 2027, you must prove eligibility for the Premium Tax Credit through the insurance marketplace.
Tip: Missed filings or failure to verify means no credit, so file your taxes on time and report income changes quickly.
Other notable individual changes
- Adoption credit: Now partially refundable with up to $5,000 cash back, even if you owe no tax
- Charitable giving: 60% limit for cash gifts to public charities is now permanent with a 0.5% AGI floor
- Wagering losses: Starting 2026, only 90% of your gambling losses can offset winnings
- Remittances: If you’re sending money abroad, a new 1% excise tax kicks in 2026 on some transfers
- ABLE Accounts: More generous contribution rules + continued eligibility for the Saver’s Credit
One Big Beautiful Bill Act summary for businesses
QBI deduction made permanent
The 20% deduction for pass-through businesses (S corps, sole proprietors, partnerships) is here to stay:
- A new $400 minimum deduction is added for applicable taxpayers
- Phase-in thresholds increased
100% bonus depreciation is back for good
If your business buys equipment, you can write off the full cost immediately, with no phaseout.
- Applies to qualified property acquired after Jan 19, 2025
- New bonus depreciation also available for “qualified production property”
Section 179 expensing limits raised
- New limit: $2.5 million, phasing out at $4 million
- Applies to assets placed in service after 2024
QSBS (Qualified Small Business Stock) expansion
- New gain exclusion tiers:
- 50% after 3 years
- 75% after 4
- 100% after 5
- Exclusion limit raised to $15 million
- Aggregate asset limit raised to $75 million
GILTI renamed & restructured
- Now called “Net CFC Tested Income”
- New rules change how foreign tax credits and deductions are applied
Heads-up for multinational owners: You’ll need to reevaluate FTC strategies starting in 2026.
Executive compensation deduction tightened
- Expanded aggregation rules now include all affiliated groups, even service groups under Code Sec. 414
- More top exec pay may now be non-deductible
Reporting relief
- 1099-K thresholds revert to $20,000/200 transactions
- 1099-NEC/MISC thresholds raised to $2,000 (post-2025)
This will reduce paperwork for many small businesses.
Farmland capital gains
Selling qualified farmland after July 4, 2025? You can spread capital gains tax over four years. But if you miss a payment, the rest becomes immediately due.
Business loss limitation made permanent
The rule limiting business losses that offset other income is now here to stay. This mainly hits high earners with large business losses.
Clean energy credits: mostly gone by 2026
- Clean vehicle, solar, EV charger, and energy efficiency credits phase out by mid-2026
- Advanced manufacturing credits (like for semiconductors) stick around but become more targeted
Bottom line: Claim energy-related credits sooner rather than later.
Planning considerations for individuals and businesses
- Act early: Many deductions and credits start in 2025 or 2026, but some phase out quickly
- Track thresholds: Most new deductions phase out at certain income levels, especially for seniors, families, and clean energy
- Verify documentation: Many credits now require exact SSNs, EINs, or other IDs, so don’t get denied for a paperwork error
- Business owners: Now’s the time to revisit your entity structure, compensation plans, and depreciation strategy
The One Big Beautiful Bill is, well, big. It brings relief and opportunities, but also sunsets and traps if you’re not paying attention. If you’re not sure how this affects you or your business, we recommend setting up a planning meeting now before tax season sneaks up. Contact us to schedule a consultation with your advisor.